EPA Inspector General Uncovers Employee’s Million-Dollar Fraud

A senior employee at the Environmental Protection Agency (EPA) was found by the agency’s Inspector General Office to have lied throughout his 20-year career, and defrauded the government of almost $1 million over the course of 12 years.

John C. Beale, former deputy assistant administrator in the Office of Air and Radiation at the EPA, pleaded guilty in September to stealing nearly $900,000 from the U.S. government in reimbursements, pay, and bonuses he didn’t earn. Two new reports from the EPA Inspector General (IG) reveal that institutional systems with very little oversight allowed the fraud to continue undiscovered for over 10 years.

In a career that is riddled with lies and half-truths, perhaps Beale’s most stunning deceit is his false impersonation of a CIA agent from 1994 to 2013. According to testimony from Patrick Sullivan, the Assistant Inspector General for Investigations at the EPA, Beale used a fake CIA job as cover for missed work days. These days totaled two and a half years from 2008-2013 and cost the federal government approximately $350,000. Instead of being on top secret international missions for the CIA, Beale admitted “that during these periods he actually was working around the house, riding his bicycle and reading books.”

Beale also began receiving retention incentive bonuses in 1991. These bonuses are given by an agency to employees who may be sought after by private companies for their special skills. The EPA IG investigation found that although Beale’s bonuses were authorized for only 6 years, he received payments for 22 years. “The agency thus erroneously paid him bonuses for 16 extra years, costing the government more than $500,000.”

Beale’s leisure time was highly paid. In fact from 2000-2013 he was paid an average of $180,000 per year. This amount was greater than statutory pay limits for federal employees at his grade for 4 of those years. Furthermore, Beale received cash awards from the agency in 2003, 2004, and 2005 that totaled $33,951 despite his frequent absences, competitive salary, and 25 percent retention bonuses.

One of the two reports released by the EPA IG last week focuses on Beale’s pay issues and revealed that concerns about his excessive salary and bonuses were raised by the IG office as early as June 2010 in an annual financial statement audit. The information was given to Beale’s department in July 2010 by the EPA’s Human Resources division, to whom the IG had referred the case, but nothing was done at the time.

It wasn’t until November 2012 that then-Assistant Administer for Beale’s department, Gina McCarthy, now head of the EPA, began to look into Beale’s pay irregularities, after she had been informed by her staff that Beale was still receiving a paycheck months after his September 2011 retirement party. McCarthy contacted the EPA’s Office of General Counsel with her concern that Beale had potentially committed criminal misconduct. The Office of General Counsel reported the case to the OIG three months later, which then conducted an in-depth investigation.

In addition to lying about working part-time for the CIA, Beale also lied about his military service career. In order to get subsidized parking at EPA facilities, Beale claimed that he contracted malaria while fighting in Vietnam. This cost the government $200 a month, totaling almost $18,000 over Beale’s career. The IG found that Beale had never served in Vietnam, let alone suffered from malaria.

It seems that the more the IG dug into Beale’s work for the EPA, the more lies, abuse, and misconduct they found. For instance, Beale’s travel vouchers and receipts were riddled with inconsistencies and exploitations. Between 2005 and 2007 Beale traveled to Los Angeles a number of times, allegedly for an EPA research project. However, Beale admitted to investigators that he was actually visiting his parents in Bakersfield, California. The IG confirmed $87,434 in fraudulent travel charges from these trips alone.

Furthermore, Beale regularly shelled out government money for travel luxuries. For example, he often stayed in expensive hotels and claimed that a bad back required first-class airplane seats. In one instance he stayed at a London hotel for four nights at $1,066 per night, all on the government’s tab.

These lies and cheats added up to quite the haul for Beale and a gigantic bill for the U.S. government. It’s therefore unsurprising that Beale would be reluctant to give up such a cushy position.

It is people and cases like this that clearly show why the IG office is so important at every agency. They uncover abuses and work to correct the systems that allow them to happen. The two reports released last week detail the agency’s efforts to fix the problems and to ensure that another Beale can’t and won’t happen again.

Beale has agreed to pay over $1.3 million in restitution and has been sentenced to 32 months in prison.

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Founded in 1981, the Project On Government Oversight is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.